Nikola joins The Stockout show
On Monday’s The Stockout show, Grace Sharkey and I interviewed Tom Schmitt, chief commercial officer of Nikola Corp. Nikola is the leading company that offers alternatively fueled Class 8 trucks. It offers both battery-electric and hydrogen-electric options. Schmitt does not believe that one of those technologies will win out over the other. Instead, as shippers and fleet owners look to reduce their fossil fuel usage and lower their carbon footprints, he expects them to select the option that best fits their individual needs and duty cycles.
Hydrogen boasts a 500-mile max range with only a 20-minute refuel time. Nikola is building out the hydrogen fueling infrastructure starting in California and is looking to build a considerable first-mover advantage. Meanwhile, its battery-electric option has a 300-mile max range with a 90-minute charge time, but there are far more options for charging when compared to hydrogen. 2025 will be the first year in which Nikola has had the two fueling options available for the entirety of the year, which Schmitt believes will help it have a breakout year.
See Monday’s show here and check out the full The Stockout playlist here.
Spot linehaul rates surge to 9-month high
(Chart: SONAR – NTIL:USA)
Spot market conditions for carriers continue to rapidly improve against a backdrop of ongoing diesel price declines. The rapid surge in spot market linehaul rates began in November and has reached its highest level since Feb 1. In the past week, the FreightWaves National Truckload Index (Linehaul Only) rose 8 cents per mile from $1.74 on Nov. 4 to $1.82. Compared to this time last month, the NTIL is up 15 cents per mile from $1.67 on Oct. 12.
The NTIL is calculated as the average daily spot rate subtracted from the estimated cost of fuel, which is calculated based on the average retail price of diesel fuel divided by an estimated fuel efficiency of 6.5 miles per gallon. The formula is NTID – (DTS.USA/6.5mpg). The key value to watch appears to be $1.90. In a post on the X platform, FreightWaves founder and CEO Craig Fuller said, “Trucking spot rates are on the verge of breaking an important technical level. We’ve seen the market test $1.90 and fail to sustain those levels in the past.” Fuller adds that if NTIL breaks though that level and continues to surge, it would, “reinforce our view of a recovery.”
Domestic intermodal demand driving up volume, rates
(Chart: SONAR – ORAILDOML.USA Seasonality view)
October is historically the strongest month for domestic intermodal volume, and sometimes there is retraction in early November, which can be seen in the chart above in 2022 (green line) and 2023 (pink line). So far this year, there hasn’t been any retraction in volume in November (white line – up 6.8% y/y this month and 4.8% y/y for all of Q4 to date), and domestic intermodal volume has traded roughly in line with the seasonal trend of the extraordinarily strong late 2020.
As we head later into the final weeks of the year, intermodal typically becomes less important as lengths of haul get shorter and shipments become more time-sensitive. But intermodal volume strength appears likely to persist this quarter amid a pull-forward of imports in an effort to avoid tariffs, as well as continued West Coast import strength to hedge against another International Longshoremen’s Association-related disruption on the East and Gulf coasts, and longer supply chains associated with most ocean carriers continuing to avoid the Red Sea (which makes Chinese New Year impact earlier). In addition, service disruptions in the international intermodal network are leading to additional transloading, which also supports domestic intermodal volume.
(Chart: INTRM.LAXDAL, INTRM.LAXCHI)
Amid that expectation for volume strength, intermodal spot rates have risen in some of the dense long-haul corridors. Since the start of the month, the intermodal spot rate from LA to Chicago increased from $1.82 a mile to $2.13 a mile, and the rate from LA to Dallas increased from $1.34 to $1.62. That suggests carriers might be getting a little more concerned with keeping containers available for the higher-priority contractual shippers. Comparing those intermodal spot rates to the truckload spot rates available in SONAR’s Market Dashboard shows that one might expect intermodal spot volume to materialize in the LA to Dallas lane (truckload spot=$2.75 a mile), but not in the LA to Chicago lane (truckload spot=$1.78 a mile).
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